Airborne Expects to Post Unexpected Loss

Published 8:00 pm, Monday, April 14, 2003

Airborne Inc. said Tuesday it will likely report an unexpected first-quarter loss, primarily due to higher operating expenses and costs related to its merger with DHL express-delivery company.

Airborne now expects a net loss of 12 cents to 17 cents a share. Analysts surveyed by Thomson First Call had forecast, on average, earnings of 9 cents a share for Airborne for the first quarter.

In the previous first quarter, Airborne earned $5.3 million, or 11 cents a share, including a 2 cent gain, on revenue of $788.5 million.

The Seattle-based company said its operating costs pushed higher by severe winter weather and the continued rise in fuel prices.

As anticipated, corporate costs related to pension and insurance increased by $5 million from the prior first quarter.

Also, legal and professional fees associated with the company's planned merger with DHL and separation of ABX Air were about $6 million during the quarter.

In March, DHL parent Deutsche Post AG of Germany agreed to acquire the ground-delivery operations of Airborne for slightly more than $1 billion.

Airborne said fuel costs rose to $1.21 per gallon in March, with the average price rising to $1.12 in the latest first quarter, compared with 71 cents in the previous quarter.

The resulting jet-fuel cost increase of about $14 million during the quarter was only partially offset by increased revenue from fuel surcharges, Airborne said.

Airborne added that domestic shipment volume increased about 3.5 percent from the previous first quarter at its ground-delivery service. Ground-delivery volumes averaged about 220,000 shipments per day in the first quarter, above the company's target of 210,000 per day.

The company noted that its core air express products _ hurt by winter weather throughout much of the United States and the sluggish economy _ have remained under pressure. They decreased an estimated 8 percent by volume from the prior first quarter.

Airborne plans to report first-quarter results on April 30.

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Shares of Airborne closed Tuesday at $19.76, down 11 cents, or less than 1 percent, on the New York Stock Exchange.